Back Issues
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Feb 23-27, 2004
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Friday, February 27, 2004
Good Morning,
Traders slowly trickled back in to the OTC BB this week and we expect more next week. Penny stocks trade a lot less
than listed stocks causing extreme volatility in price and volume. They could trade 500 times one day and 50 the next
making average volume a useless number. The only way to judge liquidity is by following stocks for a few months and
simply going by feel. 1000 trades per day is heavy for tiny stocks but keep in mind that active NASDAQ stocks trade
5000 to 20000 times a day or more. Increasing volume can cause price stability or fluctuation depending on the day.
Our job is to follow price and volume and sort out the overplayed issues and stick with the forgotten heroes that will likely
rise again. Take a guess as to how many traders are active in micro caps and you'll see that it's easy to find where they
are or aren't. The penny stock world is like a microcosm of the equities market even after making huge leaps and
bounds the past few years. It's how the NASDAQ started and if it gets too big there's sure to be a new small cap market
right behind it.
Globalnet Corp (GLBT) now represents 13.5% of our portfolio. We have bought it twice and have averaged to $.057.
We are looking for $.10 to take profits and $.035 to buy more. GLBT closed at $.0624 yesterday making it a current
source of cash. There has been no news since the new president took over last Tuesday.
Advanced Viral Research Corp (ADVR) now represents 11.8% of our portfolio. We have bought it three times,
averaged to $.141 and sold half of our position at $.16. We are looking to take more profits above $.20 and to buy
more below $.12. ADVR closed at $.165 yesterday making it a current source of cash. They were granted a U.S. patent
for the treatment of AIDS on Wednesday similar to their patent in China.
Universal Express Inc (USXP) now represents 8% of our portfolio. We bought it once at $.062 and are looking for
profits around $.09 and to buy more around $.045. USXP closed at $.062 yesterday making it a current source of cash.
They came out with earnings last week showing how much bigger they have become from recent acquisitions. They
have had no news since.
Planetlink Communications Inc (PLKC) now represents 7.8% of our portfolio. We bought it once on Wednesday at
$.059 and are looking for profits at $.12 and to buy more at $.03. PLKC closed at $.065 yesterday making it a current
source of cash. They are marketing a new GPS tracking unit allowing users to track a device over the web in April. This
is in addition to DISH network and it's high speed Internet version. PLKC has had no news this week.
ATNG Inc (ATNG) now represents 7.5% of our portfolio. We bought it once at $.013 and are looking for $.026 or so on
the upside and $.008 or lower to buy more. ATNG closed at $.0128 yesterday making it a strong backup for cash.
They have been a strong turnaround candidate lately and yesterdays news was no exception. They have brought their
debt and legal issues down to a truly manageable level.
DNAPrint Genomics Inc (DNAP) now represents 15.3% of our portfolio. We have bought it twice and are averaged to
$.05. We look to take profits around $.08 and to buy more around $.03. DNAP closed at $.048 yesterday making it a
backup for cash. DNAP has had no new stories of DNA testing for law enforcement this week.
American Fire Retardant Corp (AFRR) now represents 13.3% of our portfolio. We have bought it twice and have
averaged to $.0017. We are waiting for only two market makers left on the bid at $.001 to sell for a loss because we
never go below $.001. We would also sell at anything above $.0012 if we get the chance. AFRR closed at $.0011
yesterday making it our worst performer in quite some time. They announced the acquisition of National Certified Fire
Retardant Inc on Tuesday.
Our current cash position is 22.8% of our portfolio. This combined with strong cash backups available and the possible
sale of AFRR leaves us plenty of opportunity to pick bottoms next week. We made the mistake of putting to much cash
into such a low priced security and will keep this in mind next time. Because of AFRR our portfolio was down by one half
of one percent from last Thursday afternoon.
Tip Of The Day
Do not be afraid to diversify your portfolio with many different securities. Even with a small amount of capital you stand
a better chance of of picking a few winners than if you only buy one stock at a time. The more good companies you buy
the more likely you will have 50% of them double or more for you. Not putting all your eggs in one basket is one thing
Wall Street has right and you will definitely benefit from it.
Enjoy Your Trading Day,
Penny Stocks Daily
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Penny Stocks Daily
Thursday, February 26, 2004
Good Morning,
Let's discus the importance of buying low and selling high. You've no doubt herd of channeling stocks, trading
envelopes, Bolinger bands and moving average bands. All of these techniques can be helpful but don't lose sight of the
absolute goal, and that is to get a ridiculously low price when buying. How many times have you bought a stock that you
have been watching because it started moving up and you didn't want to be left out. You probably ended up using most
of your capital and bought at a high. A few weeks later after losing 50% or so you got out because you couldn't stand to
lose anymore. Only buy a stock when it is moving down, like Market Makers and specialist's do. Once in a position,
never sell for a loss unless something terrible happens, either break even or better is your goal and buy more if it goes
down by 50%. It is not our job to see the future and buy at exact lows. It is however our job to continue to buy as the
stock moves lower and lower and to stay well leveraged to take advantage of a sell off. In other words make sure your
back-ups have back-ups when it comes to cash and never get scared or worried and let Wall Street take you for any
amount of money. Remember that any time you sell for a gain or break-even you have won.
One exception we make to this steadfast rule is to never follow anything below $.001. We feel that this will prevent us
from getting to wrapped up in one position and lose all of our money. We are also diversified among seven equities
which allows us to put lower price targets for buys and actually hit them from time to time. Today we are at a critical
stage with American Fire Retardant Corp (AFRR) with the bid at $.001. Taking a 50 % loss or in this case 40% on any
one position is not a huge deal when it only represents 15% of your portfolio for a 5% total loss. This only happens a
few times a year for us and we always have no more than one position in these ultra risky stocks. Think of
diversification in terms of risk and the lower the price the more risk. On the other side of the coin by taking profits more
often and improving our net capital by about 5% a week we can double our money every quarter or so. Keep a close
eye on AFRR today and remember to fire your sell order only when there are a few MM's left at $.001. This could still
hold up for us as we see an ask of $.0012 and at least 13 liquidity providers at $.001. It looks like a couple have
sneaked in at $.0011 this morning but just remember to be ready.
After selling half of our position in ADVR this week to raise cash, they came out with spectacular news yesterday.
Luckily we still have a significant portion of our money invested, about 12%. Do not get angry or upset when selling a
position just before good news comes out and don't consider it losing money you never had. Our ultimate goal is to sell
before bad news and we never like to get too invested in one thing. We plan to take another half of our position off the
table today if we break into the $.20's. By taking half profits we ensure gains and leave the door open for more,
especially in something that was just granted a patent in the U.S. for the treatment of AIDS. We look to buy more when
this thing settles down again in the low teens.
We bought some Planetlink Communications (PLKC) yesterday at $.059. We were hoping for mid fives but were happy
when it hit $.075 at the end of the day. We expect a carry over this morning of yesterdays late rally and are ready to
take half profits at around a dime. We will buy more when this hits $.04. Remember to sell at the ask on the way up and
don't get caught in any downdraft. If we don't make it, sit tight as we are expecting more news about their GPS tracking
device. Dish Network has some pretty good promotions going like a free three room setup and a cheaper price than
DIRECTV. Shutting down there retail shops will allow them to market more cheaply and efficiently, similar to what
Gateway is doing. PLKC is in no immediate danger of going broke and they have some of the best profit margins you'll
see anywhere.
DNAP, USXP, and GLBT are all approximately break even for us right now and we will continue to hold. We are looking
for approximate 50% retracements to buy more and ready to take profits when we can. A penny is looking like a solid
base for ATNG and we would like to sneak in again at $.009 or $.008. We have about 6% of our portfolio invested at
$.013. We have seen a very low number of trades per day lately which has been a precursor to previous rallies. With a
tiny float this thing will move fast so wait for volume before making any moves. Remember that price follows risk and
right now ATNG is our second riskiest position.
Tip Of The Day
Market Makers see risk the same way we do and that is why they typically only provide 5000 shares at a time. The
lower the price the less money they have to put on the line. When a stock reaches 50 cents or more you will see them
lower to 2500 or 500 share at a time. Only expect to get 5000 shares at first when sending an order because this is all
they are required to provide. They will usually take a lot more but this gives them more time to sort through the orders.
When you see a trade go through for 5000 shares you know that a day trader just moved and can expect more to come
as they will sit tight on their order to prevent higher trading costs. When you see more than one 5000 share blocks
going through at a time you can bet that there are more individual traders playing the game. Look for a bunch of 5000
trades followed by larger ones all on the same side of the board to forecast a rally or sell off. Traders then adjust the
rest of their order up or down to finish it after seeing the stock move up on them right before their eyes. A good rule of
thumb when getting out of a position at a preset stop loss price is to figure 5000 shares per Market Maker. So if you
want to dump 15,000 shares, fire your order when there are only three MM's left at your price. Super low priced
securities may hold an exception as with AFRR. Figure on no more than $250 to $500 dollars per MM no matter what.
Enjoy Your Trading Day
Penny Stocks Daily
Wednesday, February 25, 2004
Good Morning,
Today we are pretty much waiting to see which one of our stocks falls the farthest the fastest. With 30% cash we are
ready to pounce on another bottom as long as there is no real bad news. We have back tested a strategy that simply
picks bottoms (which wall street says not to do) by finding support areas and waiting for the stock to break below. The
system buys when the stock has traversed the support level by the same amount as the average of the previous
retracements. Then it averages down every time the stock falls by 50%. The strategy starts with 5% of account equity
and then the amount increases by 1% every time allowing 10 buys if need be. Once the stock doubles from the average
it is removed from the program. What we found is that it very rarely bought 10 times and in fact, even horrible
companies did well like Worldcom and Enron. Even some companies that made it all the way down to $.0001 made it
back. We found that all of the companies with strong fundamentals did well. The only problem with the system is that it
takes time and money. We try to beef up this strategy by tweaking all of the element's a little to suit our needs. We look
for solid companies, start with larger amounts of capital in stocks we feel more comfortable with, never go below $.001
and take half profits at strategic sell targets. We also get out of stocks that feel stale or cold and come back to them
later.
We plan on averaging down in five of the six issues we are in if and only if these price conditions are met: USXP at
$.049, ADVR at $.12, DNAP at $.035, GLBT at $.039, and ATNG at $.008. We have these approximate price targets
where we will take half profits if we get close enough: USXP at $.09, ADVR at $.28, DNAP at $.08, GLBT at $.12 and
ATNG at $.26. AFRR is now a sell at $.001 or, because of the good news yesterday, $.0017 which would be break even
for us. We also talked about buying BICO in the teens this week, but we feel it may be out of our reach. We will put that
one on the back burner for now.
Today we are buying some Planetlink Communications Inc (PLKC). 7% of our trading equity seems appropriate to start
and we are looking for mid $.05's to get in. We will buy no matter what and are looking for $.10 as our first profit taking
stop. PLKC recently shut down their retail store's where they sold satellite based GPS units, DISH Network, and
Starband, their high speed satellite Internet service. Retail was costly and they continue to operate these business's
with outstanding profit margins, some 80%. We like there new global tracking idea that is being commercially launched
in April. This allows the user to follow a tracking device on a map right over the Internet. PLKC has no long term debt
and has expenses covered for the next year or so.
We would like to get in today because we like where this has fallen to. We think that the last pop was the first of many
and don't want to be left behind. It has come well off it's high of $.215 and has rarely broken a penny in it's year and a
half lifetime. The better a stock has held up in the past the higher and faster it will climb. Be sure to really feel this thing
out between the ask and bid because with such a small float we have some interesting spreads. Wait for the bid to fall
to $.05 and two consecutive ask reductions to something like $.058 and $.057. Then fire your order in at $.054 or
$.055 and wait a few seconds. If you don't get it wait a few hours, but don't pay more than $.06 if you can help it.
Tip Of The Day
With the NYSE's recent rule only allowing cash account's to trade with the proceeds of a stock sale after three days,
penny trading can be frustrating. With out being able to trade them on margin easily in the U.S., its really not worth
getting a margin account. This way you won't be tempted to use margin, as we do not recommend it, just as we would
not recommend trading with a credit card. Our strategy rarely has problems with this rule by always having cash coming
available and looking for longer time horizons than a day or two. Although we don't agree with this rule we think it can
help slow us down and think things through a little more.
Enjoy Your Trading Day,
Penny Stocks Daily
Penny Stocks Daily
Tuesday, February 24, 2004
Good Morning,
Yesterday was a down day all around and our portfolio was no exception. This doesn't mean it's time to listen to wall
street's analysis and sell ahead of a 20% correction due to a severely over bought market. We think the markets are
simply following their recent pattern exactly and now is another great time to get in. Our portfolio has held up quite well
through this latest pullback considering that short term highs and lows in small stocks are much more volatile than the
broad market. We are still expecting volume to pick up this week and Monday's anemic display of activity shows a
possible bottom when compared to the past year or so. We are hoping that the recent sell off in techs will bring some
much needed cash to our world.
We were able to sell half of our position in Advanced Viral Research Corp (ADVR) yesterday at $.16 in the middle of the
day. We waited until the bid hit $.159 and fired our order. Enough market makers were bullish and we were able to
meet our price condition basically by the skin of our teeth. We still have around 10% invested and look to come back in
around $.12. With our cash position being so low, we would have took $.159 although we did not state that previously.
No one is going to get the exact prices we do, they may be better or worse. Getting very close to what we want is the
key, and when the bid and ask are that close, it's clearly time to move. That would have been like selling something at
$.0119 when our condition was $.012. Its better to have absolute conditions when buying a stock rather than when
taking a gain. A profit is a profit and waiting to buy will ensure better averages.
ATNG Inc (ATNG) again almost reached another buy point of below a penny. The reason we are not jumping the gun
here is because we want the bid to break down and see how low it gets. $.01 remained very strong today despite two
small, special trades that went through below the bid at $.008. ATNG continued to trade lightly yesterday and any news
should revive it. Our cash has increased to almost 30% of our capital so we are ready to buy today if we can get $.008
or so with another 7-8% of our capital .
We are also ready to buy more GLBT if we break $.04. This thing has been free falling for a while and we would only
look for low $.03's within the next few days, otherwise we'll sit tight. Without any bad news we think that Market Makers
are loading up and ready to make a killing, don't be surprised if we get low $.03's this week. We would be surprised but
not concerned, however, if we break three cents. We expect to use another 8% of our portfolio if we buy making our
position 20% or so.
DNAP and USXP remain solid sources of cash if need be, but we would like to hold for a while. We also have a mental
stop loss on AFRR at a tenth of a penny and are now looking to fully dispose if we can get out at $.0015 or better.
These are absolute conditions considering the severe percentage increments. Both sells would be for a loss with the
second only being minimal being averaged to $.017. The reason we are not leaving now is we are waiting for some
positive results from their glove box system that allows doctors to easily put on gloves without the use of powder which
has been found to facilitate the spread of disease. This could be a huge market and we will update our conditions
pretty much on a daily basis.
Today we would like to discuss a new issue we have been watching. Bio-One Corp (BICO). We have no intentions of
buying this today but we are waiting for a huge pull back that started yesterday. This could be a quick down and back
up type of run but we have to be very careful as it could be very tough to play. Bio-one has recently acquired three new
companies with plenty of products and patents to support their nutraceutical line up. There is a growing demand in the
pharmaceutical industry for preventative health care and alternative medicine and this is exactly what they do. We like
the fact that BICO focuses strictly on this and seems to be emerging as a possible leader. They also have a great
balance sheet and there common shares do not appear to be diluted. With only about 19,000,000 shares outstanding
and a tiny float of about 9,000,000, this thing will be very volatile. It is still way over bought for us and we are looking to
get in in the high teens. This probably won't happen today, as there is more good news out this morning so we will
continue to adjust our buy point accordingly. We have a few other stocks we are watching that we'll talk about this week
so we are not to anxious to buy today.
Tip Of The Day
Spike trades can be a foreshadowing of prices to come. We are not talking about obvious mistake trades that go
through at exactly 10 or 100 times the price, but trades that are just below the bid or above the ask. These could mean
any number of things and everyone from market makers to traders can create them by routing an order directly to an
MM with their price. Large trades going through simply means that they want to sell or buy but cant find the liquidity on
the inside market. Small trades could be someone trying to guide the stock to a price that they want. Continually
guiding a stock lower with spike trades could be a bullish sign as long as they are small trades.
Enjoy Your Trading Day
Penny Stocks Daily
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Penny Stocks Daily
Monday, February 23, 2004
Good Morning,
Trading volume should pick up this week so watch for more issues trading over a thousand times per day and the more
lightly traded stocks to be a little more active. Late February and early March historically have been great times to pick
bottoms. Also watch for The Russell 2000 to break either 600 on the upside or 565 on the down side for market
direction this week. We like to buy just after the markets break below there supposed support levels, then we sell to
momentum players buying above resistance. The best way to do this is is to look at a stock your thinking of purchasing
and decide where you would put a liberal stop loss in. Now wait for the stock to hit that level and buy. In our portfolio,
we allow for plenty of opportunities to buy that stop loss by keeping plenty of cash and trading in tiny increments. Right
now we are well leveraged to take advantage of more bottoms with six different stocks, several of which are available as
reserves and some cash. USXP, ADVR and DNAP are all very close to break even or better, leaving us a painless
source of more cash.
Today we would like to apologize for two errors in Fridays newsletter. The stock symbols GLBT, and ADVR were
inadvertently replaced by the word Libya at the beginning of the third and fifth paragraphs respectively. Sorry for any
inconvenience.
We bought some more Globalnet Corp (GLBT) on Friday at $.0515 like we had planned. We also used a smaller chunk
of our total capitol than last time, only using 5%. Because of this our current average is $.057 and we are not planning
on buying more unless it breaks into the three's. We bought a little more just to bring us down in the mid fives because
we are comfortable here for the moment. We just dipped below a possible support area from early December and
volume indicates that most of the recent breakout players have already sold for a loss. This leaves the window open for
a possible market maker short covering rally of sorts leading to the same day traders coming back for more. The next
quarterly report may not come until the annual report around the end of March, but we'll look for possible early updates
from the new president.
ATNG Inc (ATNG) came very close to our next buy point of a penny or lower, it touched $.0101. We admit that it will
have to break $.01 for us to buy, but we are happy with $.013 for the moment. ATNG is turning around and expects
revenues this quarter and profitability by next quarter (which is a touch optimistic). They received a request from DK
Holdings L.L.C. with respect to a possible tender offer. ATNG stated that once they received a request in proper form
that they would reply. This was on January 27, 2004 and the company claims that the request was canceled on January
28, 2004. Dr. Robert Simpson, chairman and CEO of ATNG, said that they have no intentions of letting anyone take
them over after such recent progress. We will just have to see how this plays out as DK Holdings is not publicly traded.
The company currently expects $2,000,000 from business consulting fees from five companies. They also expect to
partially or fully engage these companies in acquisitions. They currently have two promising business's, one that makes
and sells nutraceutical products to fight fatigue and PMS, the other one is an insurance company that already has
premium commitments. We plan to buy more today under a penny and we expect to hold at least into the high two's.
We were thinking of selling DNAP in the mid five's last week but it didn't happen. Now we are looking to buy more at
$.042 or below. We will relax with this and probably sell if we break $.06 we are in at $.05 and we don't expect a
gang-buster rally any time soon. We are just below our 20% cash condition for our portfolio so we need to sell a little bit
of something soon. We are dumping American Fire Retardant Corp (AFRR) at $.001 if it gets there and the bid breaks
down, we do not, however, think that it will. We are averaged to $.017 and it would be our biggest loss in a while at
some five percent of our portfolio's value. Not huge, but something we would like to avoid. For now we'll sit tight.
Barring any sell conditions being met (DNAP at $.06, anything else doubling and taking half profits, or AFRR hitting our
stop loss of $.01) we only see one source of cash tomorrow, Advanced Viral Research Corp (ADVR). Although we are
not selling it outright we do have a tight condition, sell half of our position if and only if we can get $.16 or better for it.
This our top holding right now at just over 22% of our capital. We are very optimistic about their drug AVR118 which
has shown promising results in clinical studies for preventing the spread of cancer to vital organs. More good news
came out Friday supporting this and the stock went up to $.165 and then back down to $.15. The market has already
played this AVR118 thing out so it will take some new developments to move. We are happy with taking half profits at
$.16 for now being averaged at $.141, it would be a 12% gain and about a 2% overall gain for our portfolio. This does
not represent our usual profit taking but we need cash and we can always come back. If we don't hit $.16 we'll wait.
We are happy with USXP's recent quarterly results and expect a steady gain. There are a few new issue's that we are
looking at and will discuss later this week. Hopefully we can raise a little cash tomorrow, otherwise we will patiently relax.
Tip Of The Day
It is not important to follow the major market indices's although it is nice to know where the S&P and NASDAQ are. We
have not found a helpful and unbiased index for micro caps, so we follow the Russell 2000 as a kind of higher risk
measurement. Over the long term penny stocks will follow the same pattern as the overall market but on a day to day
basis, they tend to lag a little behind. Watch for heavily traded OTC BB stocks to rise when broader markets are selling
off. We call this the dumb money effect, traders take their profits to riskier issues in an attempt to push their luck.
Enjoy Your Trading Day,
Penny Stocks Daily